Task dependence of U.S. service offshoring patterns

Abstract

This work offers new insights into the determinants of service offshoring across countries and across service industries. Combining different data sources over the 2006-2009 period, I find that certain country characteristics affect offshoring costs for all services, while the effects of other characteristics depend on the coordination requirements of the respective service industry. The results from a zero-inflated Poisson pseudomaximum likelihood estimation indicate that the effects of a membership in NAFTA, and a common colonial past on service offshoring patterns depend on the task content of the services. These results are robust to the control for unobservable country-level heterogeneity. The quality of legal institutions, a common legal origin, geographic distance, and time zone differences influence offshoring patterns identically across all service industries.